Massive loses to automobile companies because of BS-III vehicle ban

Post the ban of sale of BS-III vehicles in India, automobile manufacturers in the country have incurred massive loses in tune of ₹ 5,000 crore according to an estimate by Society Of Indian Automobile Manufacturers (SIAM).

The ban on sale of BS-III vehicles was announced on March 29 by the Supreme Court when it said that from April 1 automobile companies will not be able to sell BS-III vehicles in the country. The ban has left auto companies with an unsold inventory of over 1,40,000 BS 3 vehicles, SIAM revealed. At the time of announcement of the ban there were 8,24,000 units of BS III vehicles left unsold in India.

Out of the total number vehicles in the inventory at the time of ban, 6,71,000 vehicles were two-wheelers, 96,700 commercial vehicles, 40,000 three-wheelers and around 16,000 passenger vehicles as well. The total BS III vehicle stock around the time of ruling was pegged at ₹ 20,000 crore.

As a result, in the last two days of March, almost all two-wheeler companies started offering heavy discounts on their BS III stock. This included premium motorcycle manufacturers as well. And in process, the companies collectively incurred a loss of ₹ 1,200 crore. From what we hear, almost 90 per cent of two-wheeler BS III stocks were sold before 1 April, 2017 while only 55 per cent of the BS 3 trucks were sold before the deadline.

Currently, India has a BS 3 vehicle stock of over 78,000 two-wheelers, almost 19,000 three-wheelers and almost 44,000 commercial vehicles. The immediate escape route will be to export the remaining stock to countries such as Sri Lanka, Bangladesh and all. Most companies agree on the fact that retro-fitting will not be an option as it will be a rather expensive exercise.